By Johann M Cherian and Twesha Dikshit

(Reuters) -U.S. stock index futures hovered near record highs on Tuesday, taking a breather after rallying in the past two sessions as investors focused on major corporate earnings including UnitedHealth and UPS.

Amazon announced it would reduce its corporate workforce by 14,000 jobs, while sources said Paramount will also begin a round of job cuts.

One of the busiest weeks of the third-quarter earnings season is underway and AI-related updates are under the scanner to justify high valuations and hefty investments, especially among the major tech companies.

Microsoft, Alphabet, Apple, Amazon and Meta will report later in the week.

In premarket trading, UnitedHealth shares rose 2.7% after the healthcare giant raised its annual profit forecast and reported better-than-expected quarterly earnings. Peers Elevance Health and Centene gained more than 1% each.

Global economy bellweather United Parcel Service climbed 9.6% after forecasting fourth-quarter revenue above Wall Street expectations. Rival Fedex gained 2.3%.

Out of 143 companies in the S&P 500 that have reported last week, around 87% have beaten analyst estimates.

Artificial intelligence has been a major driver of Wall Street's bull-market rally that marked its three-year anniversary this month.

Fed officials will meet later in the day to discuss interest rates and plans to end the central bank's "quantitative tightening" policy, which Chair Jerome Powell hinted at earlier. The central bank is due to announce its verdict on Wednesday.

Markets are now pricing in expectations for the U.S. central bank to lower borrowing costs by 50 basis points by the year-end.

"The rates view is fully priced into the market, which assigns a 100% probability of a cut this week," John Velis, BNY Mellon's Americas Macro Strategist, said in a note.

"We expect very little, however, in the form of clear forward guidance for the December meeting and into 2026, given the continued lack of government data due to the shutdown, and the unlikely prospect it will be resolved any time soon."

At 07:05 a.m. ET, Dow E-minis were up 53 points, or 0.11%, S&P 500 E-minis were down 0.75 points, or 0.01%, and Nasdaq 100 E-minis were up 13.75 points, or 0.05%.

The U.S. government has been shut down for nearly a month, delaying crucial economic data and forcing traders to rely on private releases and corporate announcements.

The Conference Board's consumer confidence report, along with surveys by the Richmond and Texas Federal Reserves, are expected to be released on Tuesday.

Among top movers, PayPal ( PYPL ) shares surged 12.7% after the payments firm announced a partnership with OpenAI to allow ChatGPT users to check out instantly.

Royal Caribbean Group slid 7.6% after a disappointing fourth-quarter profit forecast.

D.R. Horton ( DHI ) posted a smaller profit for the quarter sending shares down 3.4%.

NextEra Energy gained 2.1% after the energy company reached a nuclear energy deal with Google.

Investors are optimistic that U.S. President Donald Trump will strike a long-awaited trade deal with China during his Asia tour. Trump signed a deal with Japan to mine and process critical minerals and rare earths.

(Reporting by Johann M Cherian and Twesha Dikshit in Bengaluru; Editing by Pooja Desai and Devika Syamnath)